December Moves That Actually Matter

Confirm law with CPA — 2025-2026 legislation changed bonus, 174 relief, and SALT PTET. This is a planning framework, not a filing position.

Pair with Tax Deductions, Tax Filing Deadlines, Year-End Close, and Compliance Checklist.

Checklist

Area Action
Equipment Confirm placed-in-service + bonus vs Section 179 — see CapEx vs OpEx
R&D Capitalize 174, document credit — see R&D Credit
SALT Model PTET election vs cap — see SALT
Retirement Setup SEP/401k deadlines, fund by limit
Timing Accelerate payables, manage AR cut-off to ASC 606
Estimates True-up Q4 to avoid penalties
Equity 83(b), QSBS holding — see QSBS and 409A
1099/W-2 Scrub W-9s now — see Filing Deadlines and 1099 vs W-2

Cash-Tax Bridge

Reconcile book to tax: depreciation, 174, accruals, stock comp, meals limits, state adjustments. Tie provision to GL before return — see Financial Statement Analysis.

Worked Example: $400k Profit, Three Timing Plays

Play Mechanics 2026 effect
Accelerate $80k equipment (placed in service Dec 18) Bonus/179 per 2026 law — see CapEx vs OpEx Deduct in 2026; needs use + placed-in-service proof, not just invoice
Defer $60k December invoices to January Legitimate delivery timing, documented Shifts income to 2027; only if delivery truly slips
Prepay $25k January rent + insurance in December 12-month rule: prepaid service periods ≤12 months and ending next tax year qualify Deduct in 2026 with receipt + contract

Combined thoughtfully: $165k shifted at a 30% marginal rate ≈ $50k cash-tax timing value — but each needs its own evidence (photos/go-live ticket, shipping logs, receipts). Backdated paperwork converts planning into penalties. Run all three through the Year-End Close cut-off discipline, not around it.

Section 174 in Practice (The Cash-Tax Trap)

A $1m-revenue SaaS startup spends $600k on engineers. Under 174 capitalization, domestic R&D amortizes over 5 years (midpoint convention): year-1 deduction ≈ $60k, not $600k — creating ~$540k of phantom taxable income in a company that feels unprofitable. Mitigations to model now: R&D credit offsets payroll tax (up to the statutory cap for qualifying startups — see R&D Credit), cost segregation by project (routine maintenance vs new development), and foreign-vs-domestic split (different amortization). Track by project monthly; reconstructing engineer time in March is fiction. Coordinate the provision with Fixed Assets and the Cash Forecast — the tax bill arrives whether or not cash did.

PTET Election Checklist (State by State)

  1. Confirm your state offers PTET and you qualify (most exclude sole props/disregarded entities).
  2. Make the election by the state deadline — many require it before year-end with no extensions.
  3. Pay the entity-level tax by the deadline (estimates during the year, not April catch-up).
  4. Claim the offsetting owner credit/benefit on personal returns — amounts and forms differ by state.
  5. Reconcile PTET paid to GL and provision — see SALT and Multi-State.

Missed PTET deadlines are the most expensive December oversight after placed-in-service failures — the SALT cap otherwise strands the deduction. Calendar each nexus state’s PTET separately; they do not align — see Compliance Checklist.

Pitfalls

  • Buying equipment without placed-in-service proof.
  • Missing PTET election or payment deadline.
  • Forgetting state estimates after nexus expansion — see Multi-State and SaaS Nexus.

FAQ

Should we prepay expenses?

Only with economic substance and correct cut-off. Prepayments need all-events and delivery analysis — document, do not backdate.

What file does CPA need?

Trial balance, fixed-asset additions, loan docs, payroll returns, 1099 file, R&D logs, prior return, and provision memo.

Next Steps

  1. Model accelerate vs defer with Q4 estimates this month.
  2. Confirm placed-in-service and retirement setups before mid-December.
  3. Lock 1099/W-9 scrub into weekly close.